The table doesn't fold down, it's cantilevered over the floor. The two standing chairs fit there nicely, and when you need more table it pulls out a little further (still with no legs).
When I said put a camp bed there, my thoughts were to just move the standing chairs elsewhere and put a camp bed under the table. If you were an adult you could sleep with your head to the passenger side so if you sat up you didn't hit your noggin.
I personally feel like the space is much more versatile with the table and chairs and it makes the living are feel much more open. You can still seat people there, but you're not squishing into a booth, you can use it as a desk, there's a decent amount of storage with the cabinetry. Both my husband and I really like it (he actually liked our old booth, I am in the very anti booth category).